AltEnergy — Review Part 1

A few days ago we introduced AltEnergy in a brief “First Thoughts” article (that you can read here). To repeat, as the name of the company implies, they invest in alternate energy projects and are seeking funds from online investors in support of this activity. AltEnergy offers four investment plans. The chief information about each of them, as given in their website, is repeated below:

1.2% per day
$25 – $5,000
300 day term
Deposit included

1.5% per day
$5,001 – $15,000
300 day term
Deposit included

20% per week
$15,001 – $50,000
Term = 10 weeks
Deposit included

800% at end of term
$50,001 – $100,000
300 day term
Deposit included

The four investment plans can be divided into three groups. The first two, the 1.2% and 1.5% daily plans, fit together nicely into one group with the 1.5% plan picking up where the 1.2% plan left off; the 1.2% plan has a maximum investment of $5,000 and the 1.5% plan has a minimum of $5,001. Both of these plans pay interest on a daily basis and have terms of 300 days.

The third plan, the 20% weekly plan, does pick up there the 1.5% daily plan leaves off at a minimum investment of $15,000 and runs all the way up to a maximum of $50,000. However, it pays interest on a weekly rather than a daily basis and its term is only 10 weeks (70 rather than 300 days).

The fourth plan picks up where the third plan ends with a minimum investment of $50,000, but it is in a class by itself and, rather than pay interest earnings on a daily or weekly basis, pays it in a lump sum at the end of the investment term. Like the first two plans, the term for this plan is also 300 days.

Analysis of the 1.2% and 1.5% Investment Plans.

The 1.2% and 1.5% plans are typical HYIP investment plans. No surprises with them. Let’s first look at the 1.2% plan in more detail. For an investment term of 300 days, the total gross profit that a person could earn with this plan is 360% (1.2 x 300). Subtracting 100% from this because your principal is include in your earnings, your total net profit will be 260%. Dividing this by the number of days in the plan, 300, you get an effective daily net interest, or DNI, of 0.87%. This would be equivalent to an effective weekly interest of around 6%. These figures are in the range that a company could sustain on a long term basis. In HYIP Insights #12 (that you can read here), we suggested that a DNI of less than 1% is a very reasonable rate. So, in this regard, the 1.2% plan is a good one.

For the 1.5% plan, the same calculations would give you a total gross profit of 450% and a total net profit of 350%. Dividing this last number by 300, you get a DNI of 1.17%. This is a bit higher than the DNI for the 1.2% plan but is still within the range that might be sustainable in the long run — assuming the company carefully manages its funds. Again, please refer to the article in HYIP Insights #12 for more information on this.

The 1.2% plan will break even in 84 days (100/1.2). So, the last 216 days will be the period when your daily interest earnings will be pure profit. In other words, you bite your nails for almost three months hoping the program will survive and then, for the next seven months or so, you collect your interest and put it in the bank. In the 1.5% plan you break even a bit more quickly due to the higher interest rate. Specifically, you would break even in only 67 days, not much more than two months.

OK, let’s work through an example with actual dollar values. Let’s assume that you invest $500 in the 1.2% plan. What will happen to your investment? Since your gross daily interest is 1.2%, you will receive $6 (.012 x 500) every day for the next 300 days. You can see that, after the 84 days that we predicted above, you would have received $504 (6 x 84) and would have broken even at that time. After that, your $6 daily earnings would be pure profit and, for the next 216 days that we calculated above, you would earn a total of $1,296. Not too bad.

For the 1.5% plan, the earnings would be even better, of course. However, I am not sure that it will be too useful for us to go through this calculation as the minimum investment for this plan is a rather high $5,000. This is a lot for the typical online investor. Perhaps a few brave souls will take the risk. But, they will probably be few and far between. If you are one of these brave souls, you can work through the calculation for this plan with your own numbers in just the same way as we did it for the 1.2% plan.

This “problem” is actually a benefit to the program. Since the only investment plan that AltEnergy will be paying interest on will primarily be the 1.2% plan, its lowest interest investment plan, it will be that much easier for the company to make these payments in the long term. This is obviously very good for the long term survivability of the program.

In Part 2 of this review we’ll take a detailed look at the 20% and 800% programs offered by AltEnergy. Please stand by…

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